Blog Post

By: Maggie French

In recent weeks, GameStop (GME), a company that sells video games in store, saw its stock prices skyrocket to nearly 1,700%.[1] The increased stock price left many to wonder how this could happen, especially for a company that has been struggling during a pandemic that has forced many to stay home.

Seeing that GameStop was failing, big Wall Street investors began betting heavily against the company months ago in anticipation for the company’s failure.[2] This technique is called short selling, which is a way to invest so you can attempt to profit as stocks decline. [3] A short seller borrows stock from a broker and sells into the market with hopes to buy back the stock at a cheaper price.[4] This allows for profiting off of the difference in prices. Many have learned to buy low and sell when the stock is high. However, when you short a stock, it flips the order allowing you to sell high and buy the stocks low.[5]

Months ago, members of a popular stock market discussion board on the app, Reddit, started encouraging others to invest in the company with the hope that big investors were betting that the company was doomed. Eventually, as the Reddit movement grew, the rising stock price started troubling large investors who had bet against its success. [6]

As we rang in 2021, GameStop’s shares were already inconsistent sliding from $17 to $483 by the last week of January.[7] Some proponents of the movement believe that this not the end for GameStop.[8] Some generations grew up in an era where queuing outside GameStop waiting for the next big game was the norm. Some have been unable to part with the company based on the memory they have stored. Others in the movement are looking to make large sums of money fast.

After the markets soared, Robinhood, a zero-commission online broker app, restricted purchases of GameStop and other stocks that have been affected by Reddit.[9] Robinhood claiming that their decision came after markets had “become a voice for the voiceless” as well as a “risk management” decision, showing their sympathy to both sides of the movement.[10] This restriction came shortly after the Securities and Exchange Commission (SEC) stated that it was monitoring the market volatility.[11]

Another statement was released by Robinhood explaining that the company “makes changes where necessary” and emphasizing that users can still sell their shares, they just cannot buy more. Many Robinhood users are left confused and wondering whether or not this is legal. At least one class action lawsuit has already been filed in response to the Robinhood freeze.[12]

The lawsuit was filed in the Southern District of New York alleging that the app “purposefully willfully, and knowingly removed the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise, thereby depriving retail investors of the ability to invest in the open-market and manipulating the open market.”[13] Robinhood, which prides itself on “democratizing finance for all,” has been blasted by the Alexander Cabeceiras, the who filed the suit. He took to Twitter on January 28^th, 2021, tweeting that their mission statement is “simply not true.” Plaintiffs are seeking a reinstatement of $GME trading to the platform, a class action fee for the plaintiffs, attorneys’ fees, and punitive damages.

Democratic Senator Sherrod Brown, of Ohio, held a hearing to address the current state of the market.[14] During the hearing, he stated, “people on Wall Street only care about the rules when they’re the ones getting hurt. American workers have known for years the Wall Street system is broken.”[15] He calls upon the SEC and Congress to make the economy a place for everyone, not just the big shots on Wall Street.[16] In the U.S. House of Representatives, Maxine Waters, said they planned to hold a hearing to look into the short telling and other stock market practices that have overwhelmed the news outlets.[17] Other members of Congress have also asked for an investigation into Robinhood.

As of February 4^th, 2021, GameStop’s stocks are down 85% from January 28^th when they were at $483 apiece. At the closing on Wednesday, February 3^rd, 2021, the stock plummeted to $92.[18] How this movement over GameStop ends is unknown, big Wall Street investors, as well as everyday, people are still monitoring the stocks. Regardless of what side you are on, it is agreed that this is a learning lesson and shows the power social media has in the digital age.[19]

To end on a positive note, Hunter Kan, a student at Cornell, cashed out at almost $30,000 in GameStop Stock.[20] He took part in the movement to prove “the big boys on Wall Street” wrong.[21] Instead of keeping all of his profits, he decided to donate a portion of his funds to help kids at Children’s Minnesota Hospital. His closing quote shows his generosity, “there is no group of people more deserving of receiving a bunch of video games than some kids going through a hard time.” [22]

[1] Controversy Over GameStop’s Stock Market Saga Explained, Economy and Business, VOA News, (Jan. 30, 2021, 5:57 PM), https://www.voanews.com/economy-business/controversy-over-gamestops-stock-market-saga-explained. 

[2] Id.

[3]  James Royal, Short selling: Betting that a stock price will fall and why it can be risky, Investing, Bankrate, (Jan. 26, 2021), https://www.bankrate.com/investing/short-selling-stocks/.

[4] Id.

[5] Id,

[6] Controversy Over GameStop’s Stock Market Saga Explained, supra note 1

[7] Ian Sherr, GameStop stock crashed but Reddit still wants to send it to the moon. How and what’s next, Personal Finance, CNET, (Feb. 4, 2021, 4:45 AM), https://www.cnet.com/personal-finance/gamestop-stock-crashed-but-reddit-still-wants-to-send-it-to-the-moon-how-and-whats-next/. 

[8] Id.

[9] Taylor Tepper, The Lesson of GameStop: Investing Is Not a Game, Advisor, Investing, Forbes, (Feb. 3, 2021, 11:57 AM), https://www.forbes.com/advisor/investing/gamestop-investing-lessons/. 

[10] Id.

[11] Id.

[12] Id.

[13] Arya Hodjat, Robinhood Hit With Class Action Suit – but Here’s Why It’s Likely to Fail, Tech, The Daily Beast, (Jan. 29, 2021, 9:23 AM), https://www.thedailybeast.com/robinhood-hit-with-class-action-after-trying-to-shut-down-wallstreetbets-gamestop-uprising. 

[14] Controversy Over GameStop’s Stock Market Saga Explained, supra note 1.

[15] Id.

[16]Id.

[17] Id.

[18] Sherr, supra note 7.

[19] Id

[20] Kelsie Smith, A college student made big bucks off GameStop stock. Now he’s donating video games to a children’s hospital, Lifestyles, St. Louis Post-Dispatch, (Feb. 2, 2021), https://www.stltoday.com/lifestyles/a-college-student-made-big-bucks-off-gamestop-stock-now-hes-donating-video-games-to/article_8e1317cb-709e-511b-b5a9-7068775220d9.html.

[21] Id.

[22] Id.

By: Marina De Rosa

COVID-19 has taken the world by storm, leaving everyone affected. Whether it be contracting the virus, suffering the loss of a loved one, completing school online, working from home, or struggling in business, COVID-19 does not discriminate and as reached its arms long and wide. According to the World Health Organization the COVID-19 pandemic has put millions of people at risk to falling to poverty.[1] Additionally, the increase in the number of “undernourished” families in the United States is expected to increase by up to 132 million due to the food and natural resource shortages the pandemic will, and has already, affected.[2] One are that has taken a major hit in the pandemic is the economy.[3] “Nearly half of the worlds 3.3 billion global workforce are at risk of losing their livelihood.”[4] Without a steady paying job, billions of families in the United States will add to the poverty and underprivileged numbers, to a point that may not be repairable in the near future.[5]

While it’s hard to say anything is “flourishing” during the time of COVID-19, it’s not a stretch to make such a statement about the internet, considering the internet seems to be the only thing able to safely connect people again while quarantines are still in effect. A recent Pew Research Center survey found that 53% of Americans consider the internet and technology essential during the pandemic, and 34% find it “important.”[6] The difference being those who find it essential need the internet for daily life (such as work, and school) and those finding it important do not rely on these tools as much for work but more for entertainment and connecting with others.[7] One form of internet users that are doing particularly well during the global pandemic are digital media companies.[8] Digital media companies are companies that, “develop and delivers both content and functionality… text, video, graphics, code and applications to customers across all electronic media, from online to mobile.”[9] Essentially, they are online publishers.[10] These online publishers can take any form, such as a website or an app, or both.[11] This is not to say that digital media companies have not had their fair share of hardships during the pandemic, research shows that these companies have been struggling to keep business as well.[12] But these companies are more equipped to survive.

Another thing these digital media companies are more equipped to do is help. With their platform being online, and the mass majority of people using the internet now, these companies have a unique opportunity to stand with the community during this time of uncertainty and need. One company who stands out amongst the rest is Barstool Sports (Barstool).

Barstool is a digital media company started in 2003 by Dave Portnoy.[13] What was once a print publication on sports gambling has now turned into a multi-million-dollar enterprise.[14] Part of Barstools success is their appearance on more than just one platform. Barstool has podcasts, vlogs, Instagram, Twitter, a webpage, an app, anything considered the internet there’s a good chance Barstool is on it. With this success Portnoy used his platform to raise money and donate to small businesses across the country.[15] Portnoy announced the fund on December 17 on all of his platforms, and within 10 days the find had already raised 6 million dollars for small businesses.[16] Through their multi-media platform marketing Barstool Fund has not only gained support from their typical middle aged middle class followers, but they have reached new heights in support from celebrities to professional athletes.[17] Popular musician Kid Rock has donated $100,000 to the fund, while professional athlete Aaron Rodgers donated $500,000 and is “fully on onboard” making this a “call to action” for his teammates, fans, and sponsors.[18] With the mass amounts of support from all different places the Barstool Fund has currently raised over $34,000,000 for over 200 small businesses.[19] The link to donated to the Barstool Sports Fundraiser can be found here: https://www.barstoolsports.com/the-barstool-fund.

The simplicity of Barstool’s small business application and the reach the company has over the internet has made this digital media company one of the leading companies in the times of the pandemic.[20] Barstool is not the only company donating to small businesses, but they are the perfect example that digital media companies can do more than just produce content, and that digital media companies may be the only ones who can create change at a pace that will help the economy withstand the hardships of the global pandemic. Companies like GoFundMe, created specifically to produce funds, have been helping other businesses create digital platforms to help fundraise for COVID-19 relief.[21]

Digital Media Companies are not the only form of technology helping small businesses during this pandemic. Small businesses themselves have become savvy in the way they conduct their business, as most of them have everything to lose if their business fails. So, these businesses took technology into their own hands. In addition to using social medial platforms like Instagram and Facebook to create a “digital store front,” businesses have also created ways to keep their brick and mortar stores alive using technology.[22] Touchless sales have become important, and the company making that possible for small businesses? PayPal.[23] PayPal has set up a new program, called PayPal QR Codes.[24] If you’ve been to a restaurant that’s open during the pandemic you’ve most likely seen what these QR Codes are. Customers can scan a QR Codes that the business usually has either printed and taped to the table or posted on their door or near the cash register.[25] Once the QR Code is scanned a menu will pop up on the customer’s phone listing that restaurant’s menu, so that customer’s don’t have to touch a menu and their dining experience is as contactless as a dining experience can be. PayPal QR codes have also made it easier for small businesses other than restaurants to stay alive during the pandemic. All you have to do is download the PayPal app, the business owner has a PayPal QR Code, and the customer can scan the code to complete a transaction without ever touching a product, credit card system, or cash.[26] This PayPal QR Code system has made it easier for small business owners to show customers the products they have, without walking around a store together touching and picking products up, and then having a contactless transaction at the end as well.[27] One or two QR Codes on one app has saved multiple business owners from going under due to the public’s widespread and well founded fear of contracting COVID-19.

While COVID-19 has affected our society in more ways than one it is clear that we have to keep moving forward. Technology and digital media have made surviving in a global pandemic bearable, but they have also helped make it sustainable. The improvements in the online world prompted by COVID-19 not only help the digital companies in making changes to fit the market, but it also helps the market to survive. While you probably can’t say anything great came out of this ongoing pandemic, it is safe to say it pushed for improvements in the digital world, and in humanity towards others.

[1] Kimberly Chriscaden, Impact of COVID-19 on People’s Livelihoods, Their Health, and Our Food System, WORLD HEALTH ORGANIZATION (Oct. 13, 2020), https://www.who.int/news/item/13-10-2020-impact-of-covid-19-on-people’s-livelihoods-their-health-and-our-food-systems#:~:text=The%20economic%20and%20social%20disruption,the%20end%20of%20the%20year.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Emily A. Vogels, ET AL., 53% of Americans Say the Internet Has Been Essential During the COVID-19 Outbreak, PEW RESEARCH CENTER (Apr. 30, 2020), https://www.pewresearch.org/internet/2020/04/30/53-of-americans-say-the-internet-has-been-essential-during-the-covid-19-outbreak/

[7] Id.

[8]Alex Ford, Now Trending: The Digital Media Company, FORD LOGIC (Sept. 2, 2013), https://fordlogic.com/2013/09/02/now-trending-the-digital-media-company/#:~:text=However%2C%20it%20is%20important%20to,media%2C%20from%20online%20to%20mobile.

[9] Id.

[10] Id.

[11] Id.

[12] An Inside Look at the Impact of COVID-19 on Digital Agencies, MARKETING WEEK (Jun. 10, 2020), https://www.marketingweek.com/impact-covid-19-digital-agencies/

[13] Sean Speer, How Barstool is Taking Pandemic Aid into its Own Hands, POST MEDIA BREAKING NEWS (Jan. 15 2021), LEXIS. It is important to note that while Dave Portnoy did start Barstool Sports he has hired a new CEO, Erika Nardini, who has been the CEO for 5 years.

[14] Id.

[15] The Barstool Fund, BARSTOOL SPORTS, (Feb. 5, 2021), https://www.barstoolsports.com/the-barstool-fund

[16] WTOL Newsroom, Barstool Sports Raises Millions of Dollars to Help Struggling Small Businesses, KENS5, (Dec. 26, 2020), https://www.kens5.com/article/news/health/coronavirus/barstool-sports-raises-millions-of-dollars-to-help-struggling-small-businesses/512-e413da81-1b09-4140-abf0-862507aa4e36

[17] Spear, supra note 13.

[18] Lucas Manfredi, Kid Rock Commits 6 Figures to Barstool Sports Fund for Small Businesses, FOX BUSINESS (Jan. 4, 2021), https://www.foxbusiness.com/small-business/kid-rock-commits-six-figures-to-barstool-small-biz-fund; Liz Gonzales, Aaron Rodgers Says the Barstool Fund has a Message of Hope and Love That Nobody Else is Offering and is Officially Onboard, BARSTOOL SPORTS (Jan. 8, 2021), https://www.barstoolsports.com/blog/3234959/aaron-rodgers-says-the-barstool-fund-has-a-message-of-hope-and-love-that-nobody-else-is-offering-and-is-officially-onboard

[19] The Barstool Fund, supra note 15.

[20] Spear, supra note 13.

[21] Rosa Hernandez, Fundraising for Coronavirus Relief: How You Can Help the Fight, GO FUND ME, (Oct. 13, 2020), https://www.gofundme.com/c/blog/fundraising-for-coronavirus

[22] Allison Hatfield, 7 Ways Technology is Helping Small Businesses During COVID-19, THE DALLAS MORNING NEWS (Nov. 20, 2020), https://www.dallasnews.com/business/2020/11/20/7-ways-technology-is-helping-small-businesses-during-covid-19/

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

By: Abigail Neuviller

Parler is a social platform that launched in 2018 as an unbiased, free-speech alternative to other large social media platforms such as Facebook and Twitter.[1] Since its inception, the platform has gained popularity with conservative personalities and bloggers alike, including the ranks of Fox News host Sean Hannity, far-right show host and conspiracy theorist Alex Jones, and supporters of former President Donald Trump, before being forced offline.[2] Amazon, Apple, and Google have all pulled Parler from their app stores because the platform has not taken adequate measures to address threats to people’s safety, such as shared threats prior to the deadly January 6^th attack on the capitol.[3]

Another difference between Parler and larger social media platforms is its near 15 million users are allowed to engage in any constitutionally protected speech and it relies on their users to apply filters hiding certain kinds of content.[4] Additionally, Parler utilizes volunteer content moderators who often face large backlogs despite the platform’s executives attempting to add more full-time moderators.[5] Whereas Twitter and Facebook use fact-checking technology, restrictions on offensive language, flag sensitive or offensive content, and have thousands of people to dedicated to content moderation.[6]

Parler also has conservative financial backing. Rebekah Mercer, the daughter of a hedge-fund billionaire, Robert Mercer, has funded Parler since its inception.[7] Mercer published a post a few months ago saying she and Matze had “started Parler to provide a neutral platform for free speech, as our founders intended.”[8] The Mercer family was also one of the more prominent financial contributors to Donald Trump’s 2016 presidential campaign.[9] Dan Bongino, a controversial yet widely popular host of a conservative talk show, has also invested in Parler. With all of these conservative ties, both the right-wing and onlookers alike have questioned if this platform’s shutdown is simply because of its right leaning political content.

A federal district court in Seattle reached a decision on this matter just last week. The lawsuit was filed after Amazon disclosed on January 10^th that it was suspending its web-hosting services for Parler alleging the platform failed to respond to a steady increase in violent content after the January 6^th attack on the capitol.[10] The next day, Parler alleged in their lawsuit and accompanying motion for a temporary restraining order against Amazon since they were driven by “political animus” and a desire to “boost Parler’s competitor” Twitter, through sabotaging their platform at the exact moment they were “poised for expansive growth.”[11] The motion further accused Amazon of violating federal antitrust law in addition to breach of contract.[12]

In response, Amazon filed a brief citing numerous posts by Parler users including those with “vivid threats of violence to politicians, social media executives, journalists, Amazon delivery drivers, and even teachers.”[13] Amazon also argued that it was Parler that breached their agreement by violating Amazon’s terms of service which prohibits content that “violates the rights of others or that may be harmful to others.”[14] Their brief continues to state that when these terms are violated, Amazon has a right to suspend those accounts immediately.[15]

Amazon’s brief also points to legal arguments surrounding Section 230 of the Communications Decency Act.[16] The function of this section is to restrict liability for online service providers. Here, Amazon argues it would preclude Parler’s claims since Amazon acted in good faith to block violent and harassing content.[17] 

Amazon’s brief also refutes Parler’s allegation that they violated the Sherman Act by favoring Twitter. Antitrust plaintiffs must plausibly allege an anticompetitive conspiracy and meet the pleading standard for antitrust claims laid out in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007).[18] But Parler did not even allege in their motion that Amazon and Twitter discussed Parler, let alone formed an agreement to squash or eliminate Parler as a competitor.[19]

In Parler’s reply brief, they argued circumstantial evidence backs their claim that Amazon acted in the interest of Twitter, a much bigger and wealthier client than the Parler platform.[20] The brief continues to argue that Amazon only threatened to shut down Parler when users began leaving Twitter for Parler.[21] Amazon’s timing when combined with “Amazon’s tolerance for violent posts by Twitter users, suggests a conspiracy to promote Twitter at Parler’s expense.”[22]

Last week, a federal judge rejected Parler’s bid to force Amazon to resume providing services to the company, ruling that Parler failed to meet the threshold for this request.[23] After this decision, experts say the odds are against Parler being able to restore full service quickly because it will be difficult to find a vendor to work with them.[24] Although a final decision has not yet been reached regarding the antitrust and breach of contract claims, it seems unlikely that Parler will be able to produce sufficient evidence to meet the threshold for these claims. In conclusion, the shutting down of Parler does not appear to be a violation of free speech, antitrust laws, nor a breach of contract with Amazon and other possible providers.

[1] Sarah Needleman, When Might Parler Resume Service and Why Was the Platform Controversial?, _{WALL STREET JOURNAL} (Jan. 22, 2021), https://www.wsj.com/articles/why-was-parler-shut-down-heres-why-the-social-network-is-offline-11610478890.

[2] Id.

[3] Id.

[4] Id.

[5] Needleman, supra note 1.

[6] Id.

[7] Rachel E. Greenspan and Paige Leskin, Inside the Rapid and Mysterious Rise of Parler, the “Free Speech” Twitter Alternative, Which Created a Platform for Conservatives by Burning the Silicon Valley Script (Jan. 11, 2021), https://www.businessinsider.com/how-parler-rose-from-obscurity-conservative-alternative-twitter-platform-2020-11.

[8] Id.

[9] Id.

[10] Allison Frankel, The Hollow Core of Parler’s Antitrust Case Against Amazon, _REUTERS (Jan. 14, 2021), https://www.reuters.com/article/legal-us-otc-parler/the-hollow-core-of-parlers-antitrust-case-against-amazon-idUSKBN29I309.

[11] Frankel, supra note 10.

[12] Id.

[13] Id.

[14] Id.

[15] Frankel, supra note 10.

[16] Id.

[17] Id.

[18] Id.

[19] Frankel, supra note 10.

[20] Id.

[21] Id.

[22] Id.

[23] Needleman, supra note 1.

[24]

By: Amanda Nardozza

When news broke of a large-scale cyberattack within the United States government, many Americans were shocked to learn of the immense vulnerabilities present within the nation’s highest administrative bodies. From the Department of Homeland Security to the Pentagon––what should be some of America’s most tightly secured entities appeared to be entirely unequipped to handle the most recent attack by Russian hackers.[1] While this failure was certainly attributable in part to governmental unpreparedness, the sophistication of this breach made it particularly difficult to defend against.[2]

In this elaborate cyberattack, hackers targeted the IT management giant, SolarWinds, to gain access to its lofty clientele.[3] Unbeknownst to SolarWinds, hackers breached the company’s widely used Orion software, programing a malicious code within it.[4] According to FireEye analysts that code enabled hackers to transfer and execute files, profile systems, reboot devices, and disable system services on any server that downloaded it.[5] It also afforded these hackers the ability impersonate other users.[6] As a result, when thousands of SolarWinds’s clients completed scheduled software updates, they inadvertently provided hackers with unimaginable access to their devices.[7]

Unfortunately, those clients consist of some of the most powerful offices in the United States.[8] Indeed, the entities impacted by the Russian cyberattack include the Department of State, Department of Homeland Security, National Institutes of Health, Department of Energy, Department of the Treasury, the Pentagon, Department of Commerce, the Centers for Disease Control and Prevention, and even some state and local governments.[9] The result: a hostile, foreign adversary with nearly unchecked access to the information saved and shared between America’s most important servers.[10] Fortunately, the breach appears to be contained within the business networks of the impacted government agencies, seemingly sparing the nation’s most classified data.[11]

Nevertheless, of the SolarWinds breach has been labeled the worst cyberattack in history, against the United State government.[12] It is true that the United States government and has been hacked in the past.[13] However, the SolarWinds breach remains unique in its scope and stealth.[14] The fact that the malware was able to infiltrate so many administrative bodies, while remaining undetected for an extended period of time is like nothing the United States has ever experienced.[15] With the malicious code installed as early as March of 2020, Russian operatives had free reign to collect government data from the nation’s top agencies until the malware was discovered in December of 2020.[16] As the former counsel to the National Security, Glenn Gerstell, put it: “[i]t’s as if you wake up one morning and suddenly realize that a burglar has been going in and out of your house for the last six months.”[17]

Perhaps even more unsettling is the fact that we will not know the true extent of the damage resulting from the SolarWinds breach for months–or even years–to come.[18] Because elaborate coding can be nearly impossible to eradicate, fragments of the Russian malware likely remain despite the government’s best efforts to purge it form their systems.[19] Consequentially, these Russian sponsored hackers almost certainly retain at least some degree of access to

America’s government information, even today.[20]

Although the exposure of the United States government’s cyber vulnerability has certainly invoked feelings of disbelief among Americans, the fact that a breach occurred is unsurprising. In past years, the United States has focused primarily upon conducting its own cyberespionage, as opposed to defending against it.[21] Specifically, the Trump administration has paid little attention to the lurking threat of a cyberattack over the past four years.[22] By contrast, the Biden Administration has named restoring the nation’s cybersecurity as an upmost priority.[23] How specifically President Biden and his team will address the fallout remains unknown, but one thing is for certain: they will have their work cut out for them.

[1] Alyza Sebenius, et. al., U.S. Agencies Exposed in Attack by Suspected Russian Hackers, BLOOMBERG (Dec. 14, 2020, 2:37 PM), https://www.bloomberg.com/news/articles/2020-12-14/u-s-government-agencies-attacked-by-hackers-in-software-update.

[2] Id.; Kari Paul & Lois Beckett, What we know – and still don’t know – about the worst-ever US government cyber attack, GUARDIAN (Dec. 19, 2020, 2:57 PM), https://www.theguardian.com/technology/2020/dec/18/orion-hack-solarwinds-explainer-us-government.

[3] Isabella Jibilian, Here’s a simple explanation of how the massive SolarWinds hack happened and why it’s such a big deal, BUS. INSIDER (Dec. 24, 2020, 12:38 PM), https://www.businessinsider.com/solarwinds-hack-explained-government-agencies-cyber-security-2020-12#:~:text=Beginning%20as%20early%20as%20March,spy%20on%20companies%20and%20organizations.

[4] Id.

[5] Lucian Constantin, SolarWinds attack explained: And why it was so hard to detect, CSO (Dec. 15, 2020, 3:44 AM), https://www.csoonline.com/article/3601508/solarwinds-supply-chain-attack-explained-why-organizations-were-not-prepared.html.

[6] Jacob Silverman, It’s Too Easy to Hack the U.S. Government, TNR (Dec. 14, 2020), https://newrepublic.com/article/160550/solarwinds-treasury-government-hacked-russia.

[7] Jibilian, supra note 3.

[8] Kelsey Vlamis, Here’s a list of the Untied States agencies and companies that were reportedly hacked in the suspected Russian cyberattack, BUS. INSIDER (Dec. 19, 2020, 1:26 AM), https://www.businessinsider.com/list-of-the-agencies-companies-hacked-in-solarwinds-russian-cyberattack-2020-12.

[9] Id.

[10] Constantin, supra note 5.

[11] Oliver O’Connell, Hackers targeted US nuclear weapons agency in massive cybersecurity breach, reports say, INDEPENDENT (Dec. 18, 2020 2:50 PM), https://www.independent.co.uk/news/world/americas/us-politics/hackers-nuclear-weapons-cybersecurity-b1775864.html.

[12] Herb Lin, Reflections on the SolarWinds Breach, LAWFARE (Dec. 22, 2020, 8:01 AM), https://www.lawfareblog.com/reflections-solarwinds-breach; Paul & Beckett, supra note 2.

[13] Zachary Cohen, et. al., Massive hack of US government launches search for answers as Russia named top suspect, CNN (Dec. 16, 2020, 9:31 PM), https://www.cnn.com/2020/12/16/politics/us-government-agencies-hack-uncertainty/index.html.

[14] Paul & Beckett, supra note 2.

[15] See id.

[16] Laura Hautala, SolarWinds hack officially blamed on Russia: What  you need to know, CNET (Jan. 5, 2021, 4:32 PM), https://www.cnet.com/news/solarwinds-hack-officially-blamed-on-russia-what-you-need-to-know/.

[17] Bill Chappell, et. al. What We Know About Russia’s Alleged Hack Of The U.S. Government And Tech Companies, NPR (Dec. 21, 2020, 6:15 PM), https://www.npr.org/2020/12/15/946776718/u-s-scrambles-to-understand-major-computer-hack-but-says-little.

[18] Lin, supra note 12; Jibilian, supra note 3.

[19] Id.

[20] Id.

[21] Silverman, supra note 6.

[22] Kari Paul, What you need to know about the biggest hack of the US government in years, GUARDIAN (Dec. 15, 2020, 6:05 PM), https://www.theguardian.com/technology/2020/dec/15/orion-hack-solar-winds-explained-us-treasury-commerce-department.

[23] Howard Solomon, Joe Biden’s cybersecurity priorities: Fixing damage from SolarWinds attack, working with allies, ITWORLDCANADA (Jan. 20, 2021), https://www.itworldcanada.com/article/bidens-cybersecurity-priorities-fixing-damage-from-solarwinds-attack-working-with-allies/44106.

By: Scott Ceurvels

While adapting to an online learning environment largely necessitated by the spread of COVID-19, many academic institutions have started to utilize AI-proctoring technology in an effort to reduce cheating and ensure academic integrity as exams loom near.[1] Students and faculty have responded to this decision with great skepticism and opposition, joined by experts emanating an eerie sense of déjà vu.[2]   

In June of 2020, IBM, Microsoft, and Amazon all refused to permit their facial recognition technology to be utilized by law enforcement.[3] The concern? While this technology is advancing rapidly, there are numerous flaws critical to its fair and equitable performance that have not been remedied. [4]

Facial recognition technology is known to be far from perfect, and developers’ decision not to authorize the release of such technology for more consequential use further evidences that these imperfections are in part explained by the measurable bias exhibited in their performance.[5]

While AI technology has improved significantly in recent years, the fact remains that the accuracy of performance varies based on gender and race.[6] Facial recognition has consistently been most successful in identifying white males, while accuracy decreases substantially when identifying women and people of color.[7] This bias is so widely recognized that US lawmakers have gone as far as proposing a federal moratorium to ban its use in law enforcement until (and if) such bias can be eliminated from the technology.[8]

Even the U.S. Department of Commerce has confirmed these concerns, as the National Institute for Science and Technology stated in a December 2019 report that most facial recognition technologies are anywhere from 10 to 100 times more likely to falsely identify African American or Asian faces, as well as more likely to falsely identify women than men.[9]

But this is about academia, not law enforcement, so what’s the connection? Facial recognition, along with object recognition, eye movement detection, voice and audio recognition, and the collection of other biometric data are key components of AI-proctoring technology. [10] Consequently, racial bias, as well as invasions of privacy, security of information, and a host of other disparities have been the center of conversation surrounding the use of AI-proctoring technology. [11]

Despite these known flaws, students around the country are being compelled to comply with their institution’s integration of AI-proctoring technology, as their grades are dependent on the exams this technology will be facilitating.[12] Requiring students to permit these for-profit corporations to access and control their devices in order to record them while they take exams feels like an invasion of privacy to many students.[13] Furthermore, the security (or lack thereof) of these practices in the face of massive data breaches raises additional concerns of the potential for the data these companies collect to be exploited.[14]

While students around the country enter the final stretch of a semester contextualized amid a once in a lifetime global pandemic, anxiety is high while certainty is low.[15] Academic institutions are facing growing scrutiny on their focus on academic integrity, while students protest in opposition to the addition of yet another layer of uncertainty being thrust upon them. [16]

Many academics have insisted that technology is not the solution to preventing cheating, as this is a complex social problem that must instead be addressed by reframing the approach taken to academic assessments.[17] Rather than doubling down on the online systems that have fostered an environment where cheating has increased, institutions should instead focus on adapting with the circumstances with which they are faced. [18]

Whether altering formats to provide for open-book examinations or shifting towards written paper-based evaluations, there are far less controversial alternatives, each of which is accompanied by substantially more data to support its effectiveness in measuring students’ performance. [19]

While the concerns of cheating are undeniable, academic institutions that choose to adopt AI-proctoring technology are begging the question: is this stringent focus on academic integrity really the most effective approach, despite the lack of evidence and potential detriments to our students’ well-being?

[1] Clive Thompson, What AI College Exam Proctors Are Really Teaching Our Kids, Wired (Oct. 10, 2020, 6:00 AM), https://www.wired.com/story/ai-college-exam-proctors-surveillance/.

[2] Maddy Andersen and Hugo Smith, “Essentially Malware”: Experts Raise Concerns about Stuyvesant’s Lockdown Software, The Spectator (Oct. 23, 2020), https://www.stuyspec.com/quaranzine/essentially-malware-experts-raise-concerns-about-stuyvesant-s-lockdown-software.

[3] Larry Magid, IBM, Microsoft and Amazon Not Letting Police Use Their Facial Recognition Technology, Forbes (Jun. 12, 2020, 9:26 PM), https://www.forbes.com/sites/larrymagid/2020/06/12/ibm-microsoft-and-amazon-not-letting-police-use-their-facial-recognition-technology/?sh=73ddec7b1887.

[4] Id.

[5] Id.

[6] Davide Castelvecchi, Is facial recognition too biased to be let loose?, nature (Nov. 18, 2020), https://www.nature.com/articles/d41586-020-03186-4.

[7] Id.

[8] Jonathan Greig, Congress proposes ban on government use of facial recognition software, TechRepublic (Jun. 26, 2020, 11:31 AM), https://www.techrepublic.com/article/congress-proposes-ban-on-government-use-of-facial-recognition-software/.

[9] Patrick Grother, Mei Ngan and Kayee Hanaoka, Face Recognition Vendor Test Part 3: Demographic Effects (NIST, 2019), https://nvlpubs.nist.gov/nistpubs/ir/2019/NIST.IR.8280.pdf.

[10] Aileen Scott, Artificial Intelligence is Making Online Proctoring Safe and Secure, Medium (Mar. 14, 2019), https://medium.com/@aileenscott604/artificial-intelligence-is-making-online-proctoring-safe-and-secure-9b03845602da.

[11] Meg Foulkes, Exams that use facial recognition may be ‘fair’ – but they’re also intrusive, The Guardian (Jul. 22, 2020), https://www.theguardian.com/law/2020/jul/22/exams-that-use-facial-recognition-are-fair-but-theyre-also-intrusive-and-biased.

[12] Anushka Patil and Jonah Engel Bromwich, How It Feels When Software Watches You Take Tests, The New York Times (Sept. 29, 2020), https://www.nytimes.com/2020/09/29/style/testing-schools-proctorio.html.

[13] Id.

[14] Joe Patrice, ExamSoft Partner Suffered 440K User Data Breach… ExamSoft Still Says Everything’s Fine, Above The Law (Sep. 8, 2020, 1:13 PM), https://abovethelaw.com/2020/09/examsoft-partner-suffered-440k-user-data-breach-examsoft-still-says-everythings-fine/.

[15] COVID-19 and Mental Health: How America’s high school and college students are coping during the pandemic, Chegg, https://www.chegg.org/covid-19-mental-health-2020 (last visited Nov. 20, 2020).

[16] Avi Asher-Schapiro, ‘Unfair surveillance’? Online exam software sparks global student revolt, Reuters (Nov. 10, 2020, 7:24 AM), https://fr.reuters.com/article/global-tech-education-idUSL8N2HP5DS.

[17] Shea Swauger, Remote testing monitored by AI is failing the students forced to undergo it, NBC News (Nov. 7, 2020, 4:30 AM), https://www.nbcnews.com/think/opinion/remote-testing-monitored-ai-failing-students-forced-undergo-it-ncna1246769; see also Anna Baker, Ai proctoring won’t stop students from cheating, it is just added stress for students, The Cougar (Sept. 24, 2020), http://thedailycougar.com/2020/09/24/ai-proctoring-cheating-added-stress/.

[18] Beckie Supiano, Teaching: Assessment in a Continuing Pandemic, Chronicle (Aug. 20, 2020), https://www.chronicle.com/newsletter/teaching/2020-08-20.

[19] Id.

By: Christian Gates

Most likely if you use social media you have seen a post, tweet or comment that made you think, “Why on earth is someone able to say this?” Over the past 10 years social media outlets like Facebook and Twitter have exploded in popularity and led to people being able to share what they feel is important with a light tap on a screen. However, as social media becomes a more popular method of sharing and gathering news, censorship of it has too.

On Wednesday, October 28, 2020 the big three social media giants, Twitter, Facebook, and Google, virtually appeared before the Senate Commerce Committee to discuss amending Section 280 of the 1996 Communications Decency Act, however the main focus of the hearing turned out to be grilling the big three over censorship. [1] Section 280 protects social media companies from liability stemming from what their users post but it also gives them free reign to decide what is allowed on their platforms.[2] The big issue for lawmakers seemed to be mainly over Twitter blocking links to the contentious New York Post story regarding Hunter Biden.

This raised the question of who gets to decide what should and shouldn’t be censored. Senator Ted Cruz of Texas asked Twitter CEO Jack Dorsey, “[W]ho the hell elected you and put you in charge of what the media are allowed to report and what the American people are allowed to hear?”[3] However, it is not as easy as Senator Cruz implies. People should be allowed to freely exchange their ideas and knowledge but there is a point when that exchange can become dangerous.

If you’re even an occasional user of Twitter, Instagram or Facebook you’ve probably seen the “Fact-Checked” notice attached to posts. This notice is an easy and fast way for users to see that the post might be misleading or false. Twitter claims that the notice is not really a fact-check but is there to provide context and allow people to come to a conclusion on their own. [4]

The chaos surrounding censorship in social media started when the big three came under heavy fire for their handling of the spread of misinformation during the 2016 election cycle and the reactive approach they took. Now that the big three are being proactive in trying to stop the spread of misinformation they are being called out for censorship.

Unfortunately, it seems like no matter what the big three do they will get flak from users and lawmakers. One thing that is good, is that the social media giants seem willing to engage with users and lawmakers in coming up with solutions so that there can be a free exchange of information and ideas on those platforms.

Thus, in the meantime social media giants like Facebook, Twitter, and Google, should better inform their users about what type of posts, tweets, and comments are more likely to get flagged. Twitter has already stated that they intend to make changes in how they enforce certain policies, especially the policies that caused the Hunter Biden New York Post debacle. [5] Twitter’s head of legal, policy, trust and safety, Vijaya Gadde, tweeted that hacked information will only be removed if directly shared by the hackers or someone working with them. [6]

Only time will tell whether or not social media giants, lawmakers and users can agree to ground rules for censorship on social media. We are not out of the woods yet, and with the 2020 presidential election only four days away, expect censorship to be a contentious topic in the months to come.

[1] Rodrigo, Chris, Tech CEOs Clash with Lawmakers in Contentious Hearing, The Hill (Oct. 28, 2020 6:07pm) https://thehill.com/policy/technology/523268-tech-ceo-clash-with-lawmakers-in-contentious-hearing

[2] Bond, Shannon, Days Before Election, Tech CEOs Defend Themselves From GOP Accusations Of Censorship, NPR (Oct. 28, 2020 1:23pm) https://www.npr.org/2020/10/28/928702931/days-before-election-tech-ceos-defend-themselves-from-gop-claims-of-censorship

[3] Id.

[4] Pham, Sherisse, Twitter says it labels tweets to provide ‘context, not fact-checking’, CNN (Jun. 3, 2020 5:13am) https://www.cnn.com/2020/06/03/tech/twitter-enforcement-policy/index.html

[5] Chan, Kelvin, Twitter CEO Says it was Wrong to Block Links to Biden Story, AP (Oct. 16, 2020) https://apnews.com/article/business-media-social-media-censorship-ec529ef85c1e72cefe0ae9450e118b9c

[6] Id.

By: Justin Fowler

With over 2 billion downloads, TikTok has taken the United States by storm. TikTok, a social media platform that has users posting and watching short videos, has been the platform of choice for many during the Coronavirus pandemic (Covid-19).

Due to TikTok’s rise in popularity, the United States government led by the Trump administration targeted the app stating that a ban may be necessary. The reason for the potential ban, according to the Trump administration, was a growing concern that the Chinese government could gain access to United States user data.

Is this a legitimate concern? And if so, is a ban of the app appropriate? Experts say, “the reality of TikTok’s threat is far more mundane and not particularly unique.” Although users should be skeptical of how the app collects and handles data, the increasing concern stems from the fact that TikTok is a China-based app (owned by ByteDance).

Whitney Merrill, a former lawyer of the Federal Trade Commission, believes that “China could buy similar mobile data from data brokers or ad networks. Most ad networks are collecting the same, if not worse, information.” In 2018, Facebook confirmed that it has data-sharing partnerships with Chinese companies. And Facebook collects a LOT of data. Perhaps even more concerning, even if Facebook’s most aggressive initiates to collecting data are shutdown, countless software companies are willing to sell their users’ data to Facebook. So, what is to say that this would not be the case for TikTok?

Overall there does seem to be a privacy concern regarding TikTok, but not any more so than with any other phone app. So is a ban on TikTok the proper response? President Donald Trump certainly believes so. In his executive order, Trump posited that the TikTok app threatened “national security, foreign policy, and [the] economy of the United States.”

In response to Trump’s ban, TikTok has sued the administration. United States District Court Judge Carl Nichols stated that it is likely the Trump administration overstepped its legal authority with its TikTok ban. Proponents of the President’s ban argue that TikTok’s actions rightly lead to a ban in fear of spreading inflammatory and dangerous propaganda. It is interesting to note that proponents of the ban cited Facebook and Twitter as other applications that spread inflammatory and dangerous propaganda but did not recommend a ban on either of those apps.

Although it is uncertain what will happen, a ban could have some unfavorable consequences. A ban would likely increase distrust among countries and companies. Retaliation could ensue with other countries banning United States companies, leading to a back and forth of censorship.

As the presidential election approaches for the United States, only time will tell what may happen. A change in leadership could lead to the dismissal of the ban on TikTok. It could also lead to a shift in stance on the ongoing ban and tension between the United States and China.  

[1] Fowler, Geoffrey A. Is It Time to Delete TikTok? A Guide to the Rumors and the Real Privacy Risks, The Washington Post, https://www.washingtonpost.com/technology/2020/07/13/tiktok-privacy/(last visited October 16, 2020).

[1] Id.

[1] Wong, Queenie, Hautala Laura, Morse, Andrew. The TikTok Saga: Everything You Need to Know, CNET, https://www.cnet.com/news/the-tiktok-saga-everything-you-need-to-know/(last visited October 16, 2020).

[1] Id.

[1] Collier, Kevin. TikTok a Privacy Threat? Sure, But So Are Most of Your Smartphone Apps, NBC News, https://www.nbcnews.com/tech/security/tiktok-privacy-threat-sure-so-are-most-your-smartphone-apps-n1233625(last visited October 16, 2020).

[1] Id.

[1] Id.

[1] Michael LaForgia & Gabriel J.X. Dance.  Facebook Gave Data Access to Chinese Firm Flagged by US Intelligence, The New York Times, https://www.nytimes.com/2018/06/05/technology/facebook-device-partnerships-china.html(last visited October 16, 2020).

[1] Feldman, Brian. Even if Facebook Stops Aggressively Collecting Data, Developers Will Still Supply It, Intelligencer, New York Magazine, https://nymag.com/intelligencer/2019/02/why-facebooks-data-collection-practice-is-so-messy.html(last visited October 16, 2020).

[1] Id.

[1] Collier, Kevin. TikTok a Privacy Threat? Sure, But So Are Most of Your Smartphone Apps, NBC News, https://www.nbcnews.com/tech/security/tiktok-privacy-threat-sure-so-are-most-your-smartphone-apps-n1233625(last visited October 16, 2020).

[1] Chan, Julia.  Top Apps Worldwide for August 2020 by Downloads, Sensor Tower Blog, Sensor Tower, https://sensortower.com/blog/top-apps-worldwide-august-2020-by-downloads(last visited October 16, 2020).

[1] Collier, Kevin. TikTok a Privacy Threat? Sure, But So Are Most of Your Smartphone Apps, NBC News, https://www.nbcnews.com/tech/security/tiktok-privacy-threat-sure-so-are-most-your-smartphone-apps-n1233625(last visited October 16, 2020).

[1] Feng, Zhaoyin.  TikTok Threatens Legal Action Against Trump, BBC News, https://www.bbc.com/news/business-53660860(last viewed October 16, 2020).

[1] Id.

[1] Crichton, Danny. TikTok Files for Injunction Against Pending Trump App Ban, Tech Crunch, https://techcrunch.com/2020/09/23/tiktok-files-for-injunction-against-pending-trump-app-ban/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAELDh_fuoXeyeR2hvqI5Eoev4-(last visited October 16, 2020).

[1] Lima, Cristiano. Trump’s TikTok Restrictions ‘Likely Exceed’ His Legal Authority, Federal Judge Says, Politico, https://www.politico.com/news/2020/09/28/trump-tiktok-legal-authority-422663(last visited October 16, 2020).

[1] Can We Legally Ban TikTok?, Lawyer Monthly, https://www.lawyer-monthly.com/2020/09/can-we-legally-ban-tiktok/(last visited October 16, 2020).

[1] Id.

[1] Keman Huang & Stuart Madnick. The TikTok Ban Should Worry Every Company, Harvard Business Review, https://hbr.org/2020/08/the-tiktok-ban-should-worry-every-company(last visited October 16, 2020).

[1] Id.

[1] Id.

[1] Robertson, Adi. The Big Legal Questions Behind Trump’s TikTok and WeChat Bans, The Verge, https://www.theverge.com/2020/8/10/21358505/trump-tiktok-wechat-tencent-bytedance-china-ban-executive-order-legal-sanctions-rules (last visited October 16, 2020).

[1] Id.

[1] Id.

By: Timothy Murphy

As it stands today, most people only associate augmented and virtual reality (AR/VR) technology with video game products like the Oculus Rift, the Playstation VR or the augmented reality game Pokemon Go. However, industry insiders are keen to utilize so-called “immersive technology” in all manner of new applications, such as the fields of medicine, education, and even the military. According to the “2020 Augmented and Virtual Reality Survey Report,” which surveyed 191 experts within the industry, we have only begun to scratch the surface of the functionality and applications of this technology. Most experts in the survey predict that AR/VR technology will become a mainstream product within the next two to five years.

There are still, however, several hurdles this burgeoning industry must overcome. As some technological limitations begin to shrink with the onset of 5G, experts are anticipating challenges in another setting: the legal field. The most readily apparent legal risks in the industry take the form of user privacy concerns, government regulation, and product liability.

As with most technology industries, user data protection is a foremost concern. One of the most promising aspects of augmented reality for large companies is the potential for advertising their brand in ways never before possible. Last year, Burger King utilized an augmented reality promotion where users could point their phone’s camera at a McDonald’s advertisement. The app would then overlay a “burning” effect and reveal a voucher for a free Whopper beneath the digitally razed McDonald’s advert. As marketing efforts like this become more widespread, so too does the public concern over potential data collecting. Imagine a future where AR apps not only entertain the user, but also collect information about their home, routines, and desires. 

Several laws have already been passed to protect user privacy that will have ramifications in the AR/VR field. One such law is the California Consumer Privacy Act. This law, which became effective on January 1, 2020, gives Californians the right to request all data that large companies have collected on them, and even to have that data deleted upon request. As potentially invasive technologies continue to grow in popularity and ingenuity, it is likely that more states will need to update their privacy protection laws to keep up. 

Another legal risk stems from the sensory deprivation that consumers experience while immersed in virtual reality. There have already been several instances of VR users dying as a result of injuries sustained while wearing a headset, such as a man in Moscow who passed away after falling onto a glass table while he was using VR. There have also been hundreds of accidents attributed to Pokemon Go, the most popular AR game to date. As the AR/VR industry continues to rise in ubiquity, it is likely that there will be an equally large uptick in AR/VR injuries, and subsequent lawsuits.

It is clear that virtual and augmented reality technology has not yet fully reached its true potential. Like the internet or the cell phone, this new technology could drastically change the way we communicate with one another. Like all new technology, it is hard to predict exactly how the dust will settle, but hopefully lawmakers can strike the correct balance between encouraging the growth of this new field while also protecting consumers.

Sources:

About the California Consumer Privacy Act, Californians For Consumer Privacy, https://www.caprivacy.org/about.

Callum Patton, Virtual Reality Gamer Slips and Dies From Blood Loss After Falling On Glass Table. Newsweek (December 23, 2017), https://www.newsweek.com/virtual-reality-gamer-slips-and-dies-blood-loss-after-falling-glass-table-757966.

Dan Robitzski, The U.S. Army Is Using Virtual Reality Combat to Train Soliders. Futurism (March 22, 2019), https://futurism.com/army-soldiers-vr-combat-training.

Sol Rogers, AR Advertising: A Gimmick Or A New Advertising Frontier?Forbes (June 28, 2019),

Zach Warren, Augmented and Virtual Reality Tech Is Here, but Legal Risks Still Evolving.Law.com (April 3, 2020), https://www.law.com/legaltechnews/2020/04/03/augmented-and-virtual-reality-tech-is-here-but-legal-risks-still-evolving/.

ZoëBernard,Maybe You Shouldn’t Catch ‘Em All — A New Study Links ‘Pokémon Go’ to Traffic Deaths, Injuries, and Vehicle damage. Business Insider (November 27, 2017), https://www.businessinsider.com/pokemon-go-linked-to-traffic-deaths-accidents-and-hundreds-of-thousands-of-dollars-in-vehicular-damage-2017-11.

2020 Augmented and Virtual Reality Survey Report, Perkins Coie LLP (March 2020), https://www.perkinscoie.com/en/ar-vr-survey-results/2020-augmented-and-virtual-reality-survey-results.html.

By: Matthew Feibert

In one inconspicuous aspect, access to health care is no different than ordinary household items—it can be procured by using the internet.  This is done via telemedicine.  Specifically, telemedicine is the “practice of medicine using technology to deliver care at a distance.”[1]  In the majority of settings, telemedicine uses real-time digital face-to-face video-chatting to allow a health care professional to speak with and examine a patient.[2]  Instead of traveling to your doctor’s office and making the effort to avoid contracting an illness while sitting in the waiting room, telemedicine offers the benefit and ease of visiting your doctor from the comfort of your own home.  While telemedicine has steadily gained traction over the recent years, its use has skyrocketed since the arrival of COVID-19 in the United States.[3]  Though the use of telemedicine appears to be facially innocent, telemedicine is particularly vulnerable as it has been used as a vehicle to perpetuate health care fraud.[4]

Individuals have exploited the use of telemedicine for the purpose of enriching themselves.  The U.S Department of Justice has investigated and prosecuted egregious instances of health care fraud relating to the improper use of telemedicine.[5]  Unfortunately, telemedicine fraud schemes have resulted in the loss of staggering amounts of taxpayer dollars.

In 2019, Lester Stockett, the owner of numerous telemedicine companies, pleaded guilty to federal charges and admitted his role in a massive telemedicine fraud scheme.[6]  Over the course of the conspiracy, Stockett submitted or induced the submission of over $424 million in fraudulent claims to Medicare, over $200 million of which was paid and ultimately lined the pockets of the Stockett and his co-conspirators.[7] 

The companies that were used to perpetrate this fraud scheme were not nearby in geographic proximity.  Instead, the companies named in the indictment were registered and controlled in Florida, Wyoming, Delaware, and the Dominican Republic.[8]  This smattering of proximity between these companies demonstrates how the technological component of telemedicine allows for fraud schemes to be more far reaching and complex than ordinarily possible.  This case is only one illustration of the magnitude that telemedicine offers for those who seek to defraud the United States.

Today, although the medical community’s attention is currently focused on addressing the COVID-19 pandemic, the practice of medicine in non-COVID-19 areas must continue.  Yes, you can still become sick of an illness other than COVID-19.  In an effort to continue treating patients while simultaneously containing the spread of COVID-19 in the United States, health care providers of wide-ranging specialties have resorted to transitioning their office visits from an in-person interaction to now, a virtual interaction.[9]

On March 17, 2020, the Centers for Medicare & Medicaid Services (“CMS”) relaxed their ordinary reimbursement requirements for services performed via telemedicine.[10]  Using the “1135 waiver authority and the Coronavirus Preparedness and Response Supplemental Appropriations Act,” CMS expanded the use of telemedicine.[11]  “Prior to this waiver[,] Medicare could only pay for telehealth on a limited basis: when the person receiving the service is in a designated rural area” and in order to receive medical attention, they would need to travel a great distance.[12]  Now, among other rollbacks under the 1135 Waiver, CMS will reimburse for telemedicine services that a beneficiary receives, regardless of the geographic distance between their residence and treatment site.[13]

Given this relaxation in policy, CMS should expect to see an increase in fraudulent billing submissions relating to the use of telemedicine.  After all, it is the harsh reality in that even during times of crisis, the frequency of fraud schemes tend to experience an uptick.[14]  We can be rightfully disheartened, yet not be surprised to learn of telemedicine fraud schemes that have occurred so far during the COVID-19 pandemic.

[1]                What’s the Difference Between Telemedicine and Telehealth?, Am. Academy of Family Physicians, https://www.aafp.org/media-center/kits/telemedicine-and-telehealth.html (last visited Apr. 9, 2020).

[2]                Yolanda Smith, Types of Telemedicine, News Medical, https://www.news-medical.net/health/types-of-telemedicine.aspx (last updated Aug. 23, 2018).

[3]                Jeff Lagasse, Telemedicine is Poised to Grow as its Popularity Increases Among Physicians and Patients, Healthcare Finance (July 16, 2019), https://www.healthcarefinancenews.com/news/telemedicine-poised-grow-its-popularity-increases-among-physicians-and-patients.

[4]                Jackie Drees, 5 Things to Know About Telehealth Fraud, Becker’s Hospital Review (May 2, 2019), https://www.beckershospitalreview.com/telehealth/5-things-to-know-about-telehealth-fraud.html.

[5]                See, e.g., Two Owners of Telemedicine Companies Charged for Roles in $56 Million Conspiracy to Defraud Medicare and Receive Illegal Kickbacks in Exchange for Orders of Orthotic Braces, U.S. Dep’t Justice (Feb. 5, 2020), https://www.justice.gov/opa/pr/two-owners-telemedicine-companies-charged-roles-56-million-conspiracy-defraud-medicare-and.

[6]                Owner and Chief Executive Officer of Telemedicine Company Pleads Guilty to $424 Million Conspiracy to Defraud Medicare and Receive Illegal Kickbacks in Exchange for Orders of Durable Medical Equipment, U.S. Dep’t Justice (Sept. 6, 2019), https://www.justice.gov/opa/pr/owner-and-chief-executive-officer-telemedicine-company-pleads-424-million-conspiracy.

[7]                Id.

[8]                Id.

[9]                Medicare Telemedicine Health Care Provider Fact Sheet, Ctrs. for Medicare & Medicaid Servs. (Mar. 17, 2020), https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet.

[10]              See id.

[11]              Id.

[12]              Id.

[13]              Supra, note 9.

[14]              Greg Iacurci, Coronavirus Scams, Feeding off Investor Fears, Mimic Fraud From the 2008 Financial Crisis, CNBC (Mar. 21, 2020), https://www.cnbc.com/2020/03/20/coronavirus-scams-on-the-rise-mimic-fraud-in-2008-financial-crisis.html.